Development Bank of Jamaica gets credit rating upgrade
The Caribbean Information and Credit Rating Services Limited (CariCRIS) has upgraded the corporate credit rating of the Development Bank of Jamaica (DBJ).
The DBJ has now been assigned ratings of CariBBB+ (Foreign Currency Rating) and CariA- (Local Currency Rating) on the regional rating scale, and jmAA on the Jamaica national scale, up by one-grade from six consecutive years of receiving ratings of CariBBB (Foreign Currency Rating) and CariBBB+ (Local Currency Rating) on the regional rating scale, and jmAA- on the Jamaica national scale.
According to CariCRIS, upgrading the DBJ by one notch indicates that the level of the bank's credit worthiness, based upon a national US$5-million debt issuance, is adjudged as "adequate" on the Caribbean rating scale, and is adjudged as "high" on the Jamaican national rating scale.
CariCRIS' report noted that the ratings reflect DBJ's enhanced institutional focus on risk management and the bank's continued strategic importance to the Jamaican Government as the lead development financier and manager of the Privatisation and Public-Private Partnerships programmes for state assets.
According to the report: "The ratings are further supported by the DBJ's good overall financial performance and improved asset quality."
One weakness that it highlighted was the Bank's "significant reliance on the relatively weak, though improving Jamaican economy."
CariCRIS justified its decision by saying over the last three years, DBJ has developed a "robust risk-management function by implementing a three-lines-of-defence approach to the management of risk through its board of directors, Strategic Services Division and internal audit". These were further supported by a comprehensive enterprise risk-management (ERM) framework, which included elements of the ERM integrated framework of COSO (The Committee of Sponsoring Organizations of the Treadway Commission), which provides guidance and develops frameworks on Enterprise Risk Management, internal control and fraud deterrence, and of ISO 31000:2009 (International standard on risk management), which provided a generic framework for establishing the context of, identifying, analysing, evaluating, treating, monitoring and communicating risk. Both of these programmes, said CariCRIS, are two well-established international standards on risk management.
Reacting to the CariCRIS ratings upgrade, DBJ Chairman Joseph M. Matalon said: "I am very, very pleased at the improved rating that the DBJ has received. Once again, the bank's overall performance has belied the conventional belief that government entities are universally inefficient and poorly run.
Milverton Reynolds, DBJ's managing director, welcomed the bank's improved rating.
"We are extremely pleased with CariCRIS' upgrade,
particularly as it comes from an external and totally independent agency," he said. "It continues to enhance the DBJ's
reputation as a state-owned entity that is well managed and successful."